MELINDA JAMES: I'm joined now by Energy Minister Angus Taylor. Angus Taylor, good morning.

ANGUS TAYLOR: Morning, Melinda.

MELINDA JAMES: So, there are a few things at play here - you're talking about a new default power price. Can you explain to us how this would work?

ANGUS TAYLOR: Well, when your contract comes up with your energy provider - whoever it might be, one of the big ones, AGL, EnergyAustralia and Origin, or one of the smaller ones like Powershop - when it comes up, typically at the end of the year for households, if you don't go and negotiate an alternative price, you get whacked on to what's called a standing offer, a default price, and that price has gone up and up and up and up. So, what it means is if you forget to go and get on the phone and say, hey, I want a better price, you simply don't have time to do it, a lot of people - it's a lot of effort, you've often got to go and make a whole series of phone calls to sort it all out, you get whacked. Unfortunately what you're copping - which we call a loyalty tax - that loyalty tax has gone up and up and up and up. It has doubled in some states in the last four years or so. So, we're saying to the big energy retailers it's not on, that's a rip off and it's got to stop, the Australian Energy Regulator will set a default price against which companies will be measured now and we expect them to come into line with that. On top of that, what they then do is offer - make offers which are very, very confusing, it's a little bit like trying to buy a phone plan, you get all these discounts and numbers, it's really hard for people to compare their plans even if they do pick up the phone and try to negotiate a better offer. And we'll be simplifying that with what we're calling a reference bill, a very simple way of comparing offers from different companies. This is all about giving power back to the customer. It's only one of a number of initiatives that we announced yesterday but it's an important one because it will make a real difference to a lot of people who struggle to get a better deal.

MELINDA JAMES: Angus Taylor, we're having a little bit of trouble with your phone, it's getting a bit muffled at times. So, I'm not sure what we can do about that but we'll press on for the moment. So, at the moment a lot of people probably didn't know that that the onus was on them come the end of the year to renegotiate a deal with their retailer, so have some customers been paying a lot more and effectively subsidising the cheaper rates that other, the more energised amongst us have been seeking out?

ANGUS TAYLOR: Well, I'd say they're not subsidising other consumers, they're giving money to the energy companies. It's as simple as that. This is a rip off and it's got to stop. It's got a lot worse in recent years. So, there's no subsidising other customers, it is simply just bad practices and that's why we're cracking down on it. As I say, Melinda, there's other bad practices out there we're cracking down on as well. People have been hit with penalty rates, big penalties if they don't pay on time. I mean, far more than the cost of not paying on time for the energy companies, so we're cracking down on that. Energy companies haven't been passing on reductions in wholesale prices. Again, that's unacceptable behaviour.

MELINDA JAMES: Can I ask, sorry, when you just say cracking down, we've heard from Scott Morrison a lot about the big stick. What's the big stick? What will happen to these retailers if they don't comply and if it's found that they are still gouging consumers?

ANGUS TAYLOR: Well, there's a series of different sticks - interventions from the ACCC, from the Treasurer and from courts. We'll be putting legislation to the Parliament, the Commonwealth Parliament in the coming months before the end of the year with a package of legislation, which will give powers to the ACCC, the Treasurer and the courts to crack down on behaviours which are unacceptable. I've just given you some examples of those unacceptable behaviours by the energy companies.

MELINDA JAMES: Now, we know that there are always - or there can be, at least, I should say - unintended consequences of market intervention by governments. In this case retailers are saying that - and of course they have a very particular interest here - but they're saying that by setting this default price it will act as a cap and maybe it would be very, very difficult for smaller suppliers to enter the market and basically it would reduce competition and so have the opposite effect.

ANGUS TAYLOR: Well, I just think that's rot, it's absolute rot. I mean, by reducing prices you get a better deal for customers and that's what this is all about. Look, it is true that some energy companies have been confusing customers as a way of getting them on to their books. What they've been doing is saying we'll give you a 20 per cent discount, the trouble is the discount is versus a very, very high price. They don't tell you what the discount is compared to. It is also true that companies that are doing that will not be able to do that or will find it very difficult to do that in this regime, when they shouldn't be able to do it. They simply shouldn't. So, there's vested interests in this argument and we're not going to pander to those vested interests. We will sit squarely on the side of the electricity consumer, the electricity user.

MELINDA JAMES: Now, you'll be meeting with state energy ministers or your counterparts, whatever their particular title happens to be, around the country on Friday. A lot of listeners might be thinking we've been hearing about this for such a long time, that we are being gouged by retailers, that there are these extra costs, that it's too difficult to switch, that it's all too confusing. Why has this proven to be so difficult for governments to wield the so-called big stick when we've been hearing from the consumer watchdog, the ACCC's been saying similar things for a long time. Why is this seen as such a difficult task?

ANGUS TAYLOR: Well, now is the time we're doing it. We haven't done it before. We're doing it now. So, we can debate whether it should have been done a year ago or two years ago but we are doing it now. We have alerted customers to the fact that this is going on and we've had 1.6 million households go and get themselves a better deal in recent times. So, there's no doubt there's growing awareness and that is having an impact but we've got to go further. That's what these initiatives do, they're part of a broader package that's also focused on getting wholesale prices down, network charges down, supply up. So, this is a broad ranging reform agenda, and in combination, we think that it will have over time a very substantial impact.

MELINDA JAMES: And just finally - I apologise for not having given you much time to answer this question - but part of this you were being called the ‘Minister for Lowering Power Prices’ but a big part of your portfolio as well is reliability within the network. I noted a report that was in The Sydney Morning Herald just a day or two ago that your top energy advisor Kerry Schott has said, and this is a quote from the report: “That the plunging cost of renewables will force Australia's remaining coal plants to close even earlier than planned as mining giant BHP renewed calls for a price on carbon to urgently slash national emissions”. What does that mean for reliability when your top energy advisor is saying that our existing coal power plants might actually have to close earlier because they won't be competitive against renewables?

ANGUS TAYLOR: Well, it's not a matter of competitiveness, it's a matter of how the market works. If solar and wind come in, they get priority effectively. So, what it does is it means that your big baseload coal and to a lesser extent gas generators get pushed out. Now, that's all well and good for emissions, we are doing extremely well on emissions reduction in the electricity market - extremely well – we will reach our 2030 Paris targets well ahead of time because of what Kerry is describing there. The challenge it creates for us is to keep the system reliable and that's why we're putting a reliability obligation now on the retailers to say, you have to have enough reliable power to meet your customers' needs and you have to do that many years ahead. You have to think ahead about the portfolio; electricity generators, you need to meet your customers' needs years ahead of time. We'll be putting that reliability obligation to the COAG Energy Ministers this year, with the aim of having it in place by 1 July next year.

MELINDA JAMES: And look, I'm not expecting you to be able to respond to this but it goes to my earlier question about competition, I suppose. But someone on the text line says – “Hi Mel, I'm in Angus' electorate at Tahmoor on five acres. Endeavour has told me I only have Origin for my energy and no off peak”. This texter says, “Where do we go?”

ANGUS TAYLOR: Well, I don't know the particular circumstances of that person but that sounds wrong to me. There is retailer contestability in that area and they can ring AGL, they can ring EnergyAustralia, they can ring Powershop, they can ring many other retailers. I don't want to advertise any one retailer, there's lots and lots. Go on to the Energy Made Easy website, it's a very good website, I use it for my own electricity –

MELINDA JAMES: Yeah, you shouldn't be locked out from using any particular retailer because of where you are.

ANGUS TAYLOR: No, no, no, no, no - and Endeavour Energy, it doesn't matter who your network provider is, you have the option of choosing between lots of different retailers. And you should.

MELINDA JAMES: Alright. We'll have to leave it there but thank you so much for joining us this morning.

ANGUS TAYLOR: Thanks, Mel.